“It is not inconceivable that the ECB ends up being the most equity-friendly central bank in 2014, and I didn’t think I would ever hear myself say that,” says Peter Sullivan, head of European equity strategy at HSBC in London. “Growth just picking up to between 0.5% and 1% means stabilization continues.” …

Portfolio manager David Herro has invested about 75% of the Oakmark International Fund (OAKIX) in a big bet on Europe. He doesn’t want the indexed ETF’s heavy exposure to commodity calls in energy, nor to pharmaceuticals beholden to government spending cuts. He prefers value-priced names and multinationals, including luxury auto makers like Daimler (DDAIF) and BMW (BMW.Germany), financials Credit Suisse Group (CS) and Allianz (AZSEY), and consumer plays Danone (DANOY) and Diageo (DEO). (See Q&A, “Beating the Market for 20 Years,” Aug. 13.)

“Share prices have rallied a little bit, but they lag North America and Japan. You are left with the same investment proposition that you had a year ago, even though shares are not as cheap,” Herro tells Barrons.com.

DeFotis recommends Vanguard FTSE Europe ETF (VGK) as an easy and effective way for bulls to take their position.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.